BlackBerry outages irk India, threaten key RIM market

By IBT Staff Reporter On 10/14/11 AT 3:38 AM

A four-day service outage has cast a shadow over BlackBerry's reputation in India, one of the smartphone maker's few growing markets, where the frustration of hundreds of thousands of users could mean a chance for its rivals to gain ground.

The repeated shutdowns of email and messaging services that left BlackBerry users with only voice calls and SMS text infuriated Indian customers, including a tennis star and a Bollywood icon, leaving BlackBerry maker Research In Motion scrambling to control the damage.

In the capital market, every second matters. Time lost is money lost. Had it been for couple of hours, that was okay. But it stretched much beyond that, said Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities in New Delhi.

RIM has fixed the root cause of the global disruption of BlackBerry services and is still working to clear a backlog of delayed messages, its co-CEOs said on Thursday, hoping to control the damage.

More than a million people use BlackBerry in India, the world's second-biggest mobile phone market. RIM has established a strong, but not dominant, foothold in the price-sensitive market thanks largely to its cheap models.

A large corporate user base that relies on its enterprise email system, the huge popularity of RIM's BlackBerry Messenger platform among young people and competitive pricing mean it outsells Apple Inc.'s iPhone by around five to one.

In the June quarter, BlackBerry accounted for 15 percent of smartphone sales in the country, researcher IDC said, trailing Nokia's share of nearly 46 percent and Samsung's 21 percent, but far ahead of Apple's 2.6 percent.

The lowest-priced BlackBerry 8520, RIM's best-selling model in India, is available at about 9,000 rupees ($184). The entry-level iPhone 3GS model is around 20,000 rupees.

But low-cost competitors, especially those based on Google's Android system, are poised to grab market share.

Apple is still a premium user play, but if you look at others, especially the Android ones, you can have the same features that BlackBerry is offering pretty much at half the cost, said Abhishek Chauhan, Senior Consultant, ICT Practice, at Frost & Sullivan.

BLACKBERRY BOYS

BlackBerrys were initially seen as a tool for executives.

With rising incomes and a burgeoning middle class in India, RIM has expanded, targeting young professionals and students with its youthful We're the BlackBerry boys commercials, portraying the smartphone as a gadget for the aspiring masses.

RIM's shipment to India quadrupled to 770,652 in 2010, from 191,379 in 2009, according to CyberMedia Research, which estimates that RIM has sold 1.06 million smartphones in India over the past three years.

Companies will not switch to Apple or Google phones overnight, especially given BlackBerry's secure corporate email system, said Romal Shetty, head of telecommunications analysis in India for KPMG.

But from a youth perspective, there is certainly more of an impact from these kinds of failures. There is definitely a dent made in reputations.

BlackBerry's free instant messaging service, has been a big draw for India's urban youth, but rival products from Apple and Google now mean it is not unique.

The BB service failure surprisingly did affect me, from being out of touch with my Gmail to not being able to 'ping' my friends. The handicap was overwhelming at times, said 22-year-old Snigdha Ahuja, who works for a television channel in Mumbai.